Financial Markets - Weekly Summary

Brief summary from this week in all the markets:

Bonds
-10 year treasury yield rose 15 basis points for the week to end at 5.19%. FT seems to think the release of strong economic data including the fact that roughly 132,000 jobs were created this month contributed to this rise. Logic seems ok to me. Rosy economy numbers are not welcome in the bond markets is what I have read so far.

-10 year gilt also rose 10bp to 5.56% while the 10 year Bund gained 12bp to 4.68%. Again FT suspects these rises were in anticipation of higher interest rates in the eurozone and the UK.

Equities
-Apparently the Bond market had little impact on the equities which continued to rise this week. Blackstone's acquisition of the Hilton Hotel group and other M&A deals including that by AMO for Bausch and Lomb appear to have driven the equity markets. All the major indices in the US, UK, and Japan along with those in Seoul, HK, and Mumbai gained.

-Apple, Research in Motion, Intel, and Google all went up.

-One interesting observation was that FT claimed a strong increase in short-term call options due to unsubstantiated takeover rumors drove some stocks high this week. When I looked up three of the stocks that went up due to high volume of call options, nothing stood out. Archer Daniels Midland (ADM) which is in the agricultural products sector gained 6.2%; Verasun Energy (VSE) is in the ethanol production business (5.7%); while Quest Diagnostics
provides medical testing services. No common theme sector wise was observed. The speculation is that these are all targets of private equity buyouts.

-Wonder how long this buyout spree will last. How high do the interest rates have to go before this madness ends?

-Second Q earnings are expected to be out starting next week and positive results are expected which might further drive the equity markets upwards.

-KKR filed for an 1.25 B IPO this week. Not sure when they will start trading. Oh, by the way Blackstone went over $31 this week.

-CME increased their bid for CBOT but the new bid is still short of the ICE offering.

Currency
-Sterling is @ $2.02 which is a 26 year high.

In other news, there appears to be a man richer than Bill Gates: Some Mexican dude by the name of Carlos Slim whose net worth as of this week is supposedly $67 B! Take that Billy boy!